Sixty-six outpatients with mild to moderate dementia in Alzheimer's disease at baseline were examined twice with an interval of 12 months. Twenty-two of these patients who were admitted to a nursing home within this period were compared to a group of 44 patients who remained living at home with respect to demographic data, cognitive and physical dysfunction, behavioural changes in daily living and the burden of caregivers. Stepwise discriminant function analysis revealed that older age, global cognitive decline, incontinence, aggression, depression, and the caregiver's wish to leave the care to someone else were predictors for nursing home placement within 1-year follow-up and correctly classified 82% of the cases. The study indicates that factors predicting nursing home placement in Alzheimer patients are complex, including demographic characteristics, level of cognitive and physical functioning, behavioural abnormalities in daily living, as well as burden of the caregiver, and are consistent with predictors of institutionalization found in healthy elderly individuals.